Vale keen to buy out BHP from tragedy-hit Samarco mine
Vale, BHP Billiton’s partner in the tragedy-hit Samarco iron ore mine in Brazil, is keen to buy BHP out of the project.
Vale, BHP Billiton’s partner in the stalled Samarco iron ore mine in Brazil where 19 people died two years ago when a tailings dam burst looks increasingly keen to buy BHP out of the project — if it can get it at a cheap price.
This is the second time in the past five months that speculation has come out of the South American nation that Brazilian iron ore giant Vale wants to buy BHP’s 50 per cent stake in the mine. The dam failure is the subject of criminal legal action and negotiations are ongoing with the government over about $US47.6 billion ($60.7bn) worth of compensation claims.
International news services Bloomberg and Reuters had unsourced stories from Rio de Janeiro yesterday saying there was the possibility of Vale taking ownership of the project.
Reuters said any deal would depend on BHP’s willingness to exit the venture, indicating the push is one-sided.
BHP would not comment. But it is believed it has little appetite to quickly get out of Samarco, which was run by a joint venture company (rather than one of the partners) when the dam failed.
If BHP does have meaningful discussions to exit, it is likely to be once there are firmer details on the timing and conditions around a restart as well as an indication of the price.
In August, BHP was forced to deny Brazilian reports that a deal had been reached by the pair that Vale, which owns nearby mines it may be able to use to extract savings, would buy BHP out.
The dispute over what suitable compensation should be paid is ongoing, as is remediation work.
Samarco, Vale, BHP and federal prosecutors have asked for a period until April 20 to continue negotiations for settlement of the public civil claims.
No estimate for a restart of the mine in the wake of the November 2015 disaster has been given.
The tailings dam failure sent millions of tonnes of mining waste into the valley below the mine, flattening the town of Bento Rodrigues, where the five victims not employed by Samarco were living, and causing widespread environmental damage across the Rio Doce river system.
At BHP’s annual general meeting in Melbourne in November, chief executive Andrew Mackenzie would not speculate on how much the dam burst could cost the company. But Mr Mackenzie said the company was determined to put things right.
“This was a terrible disaster, we feel really bad about it, we’re determined to fix it and we will fix it in line with our values,” he told investors at an information session before the meeting.
“We’ve made huge progress in cleaning up the environmental effect of the disaster and in dealing with some of the social issues.”
Mr Mackenzie said the target was for communities that lost their homes to be rehoused within 18 months.
Mr Mackenzie said the long timeframe was because whole villages had been destroyed, people did not want to return, and approvals to rebuild in different locations needed to be sought.
The week before Christmas, BHP said it had agreed to further financial support of up to $US181 million for the Renova Foundation, which manages environmental and social programs, to repair the damage from the collapse. Of that, $US133m would be used to fund remediation and compensation programs and would be offset against future penalties over the dam burst.
The rest will go to Samarco for repair works, maintenance, to support restart planning, including $US6m for consultant fees around remediation and compensation programs.
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